Thai government considers utility tokens to boost digital wallet initiative

The Pheu Thai-led government is anticipated to roll out utility tokens to bolster its digital wallet initiative, a move pending approval from the Bank of Thailand as the regulator currently bans using tokens as payment, according to Asia Plus Securities (ASPS). The financial services company projects that the government will issue Type 1 utility tokens, each valued at 10,000 baht, to Thai citizens aged 16 years and older, potentially requiring a budget of 560 billion baht.

Discussions are ongoing with the Finance Ministry and the Securities and Exchange Commission regarding the issuance of these tokens and the identification of funding sources, as per the brokerage.

The ASPS noted in a research document that the government is expected to issue the tokens for consumer purposes, and utility tokens cannot be traded on digital asset exchanges.

Prime Minister Srettha Thavisin recently affirmed that the digital wallets are slated for an early launch next year. The utility tokens will come with certain stipulations, such as their use for purchasing consumer goods within a 4 kilometre perimeter of the recipient’s home.

ASPS, citing a study by the Thailand Development Research Institute, shared that the digital wallet initiative’s budget could partially come from the government’s fiscal 2024 income, forecasted to rise by 260 billion baht, and increased tax revenue of approximately 100 billion baht, a result of economic stimulus measures.

However, Therdsak Thaveeteeratham, executive vice president of ASPS, voiced concerns about the funding source. He indicated potential reductions in the government budget, including investments, due to the high public debt. He also questioned the certainty of increased tax revenue from stimulus measures, given the uncertainties about their effectiveness in reviving the economy.

ASPS suggested that the government might resort to borrowing to finance the digital wallet project. As of June 2023, Thailand’s public debt-to-GDP ratio stood at 61.2%, and the government has the legal capacity to borrow until it hits 70%. This suggests that the government can borrow an extra 1.58 trillion baht based on GDP estimates of 17.9 trillion baht, reports Bangkok Post.

However, ASPS emphasized that, in principle, government loans should not reach this limit. They said…

“This issue needs to be monitored over the long term to determine whether it will produce effective results and when the scheme is going to occur. But in the short term, the economy is expected to recover because of existing supporting factors.”

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